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Maltese Laws |
INVESTMENT SERVICES ACT
To regulate the carrying on of investment business and to make provision for matters ancillary thereto or connected therewith.
19th September, 1994;
23rd September, 1994;
30th December, 1994;
8th July, 1995
ACT XIV of 1994 as amended by Acts: XXIV and XXV of 1995; Legal
Notices 191 of 1998 and 46 of 1999; Acts XVII of 2002, IV of 2003, XIII of
2004 and XII of 2006; Legal Notice 318 of 2006; Act XX of 2007; Legal
Notice 425 of 2007; and Acts XVII of 2009, XIX of 2010 and X of 2011.
PRELIMINARY
"collectiv e i nvestment sc heme" mean s an y scheme or arrangement which has as its objec t or as one of its objects
the collective investment of capital acquired by means of an offer of un it s for su bscri p t i o n , sa le or e x ch ang e a n
d wh ic h has th e following characteristics:
(a) the scheme or arrangement operates according to the principle of risk spreading; and either
(b) the contributions of the participants and the profits or income out of which payments are to be made to them are pooled; or
(c) at the request of the holders, units are or are to be re- purchased or redeemed out of the assets of the scheme or arrangement,
continuously or in blocks at short intervals; or
(d) units are, or have been, or will be issued continuously or in blocks at short intervals:
Provided that the competent authority may issue a licence with respect to a sche me or arrangement whose units are to be offered
for subscription, sale or exchange to:
(i) licence holders; or
(ii) persons whose ordinary business involves the acquisition and disposal of instruments of the same kind as the instrument
or instruments in which the scheme or arrangement invests; or
(iii) persons whose ordinary business involves the acquisition and disposal of property of the same kind as the property, or
a substantial part of the property, in which the scheme or arrangement invests; or
Short title. Interpretation.
Amended by:
XVII. 2002.136;
XX. 2007.61;
XVII. 2009.3;
X. 2011.23.
Cap. 330.
(iv) persons who by regulation under this Act are exempt from the requirement of an investment services licence provided
that the scheme or arrangement invests in instruments or property in respect of which such persons are exempt;
Notwithstanding that such a scheme or arrangement does not have the characteristic listed in paragraph (a), and in any such c a se, suc h scheme or a r rangeme nt sh al l be d e emed to be a collective investment scheme;
"collective investment scheme licence" means a licence for the i ssu e or creat ion of un its o r t he carry ing on of
an act ivi ty b y a collective investment scheme issued under article 6;
"the Community" means the European Community established by the Treaty of Rome in 1957 and amended institutionally and
o t herwi se in 19 86 b y th e Sin g le European Act , i n 19 93 by the Treaty on European Union, in 1997 by the Treaty of Amsterdam
and in 2001 by the Treaty of Nice, and as amended by accession agreements and as may be further amended from time to time;
"competent aut hori t y" m e a n s t h e M a l t a F i n a n c i a l S e r v i c e s Authority established by the Malta Financial Services Authority Act, which body shall also carry out the duties as competent authority for all purposes of the MIFID Directive and the UCITS Directive;
"document" or "documentation" includes information recorded in any form and, in relation to information recorded
otherwise than in l eg ible form, references t o it s pro ducti on i nclude references to producing a copy of the information in
legible form;
"EEA State" means a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on
the
2nd May, 1992 as amended by the Protocol signed at Brussels on the 17th March, 1993 and as amended by any subsequent acts;
"Euro p ean investment firm" means an invest m e nt fi rm as defined in Article 4(1) of the MIFID Directive and as authorized by its European regulatory authority within the meaning of Article 5 of the Directive or authorized by a European
regulatory authority in an EEA State;
"Euro p ean r e g u l a to ry au th ori t y " mean s t h e bo dy o r bo di es designated by a Member State or EEA State
in accordanc e with Article 48 of the MI FID Di rectiv e and Article 97 of the UCITS Directive to carry out each of the duties provided for under the different provisions of both said Directives;
"exem p ted p e rson" m e an s a person w ho for any reason i s exempted from any or all of the provisions of article 3;
"instrument" means any instrument, contr act or right falling within the Second Schedule to this Act and whether or not
issued in Malta;
"i nv estmen t adv e r tisement" m e ans an y f o rm or m e d i um of advertising or promotional activity, other than a
prospectus, the co nten ts of wh ich, ei th er inv i t e s persons, o r cont ain s m a terial calculated to induce persons:
(i) to become or offer to become participants in a collective investment scheme; or
(ii) to subscribe for or otherwise acquire or underwrite an instrument; or
(iii) to purchase or otherwise procure an investment service;
"investme nt agreement" means any agre eme nt the making or performance of which by either party constitutes an investment
service;
"investment service" means any service falling within the First
Schedule when provided in relation to an instrument;
"i nvestment services lice nce" means a licence to provide an investment service under article 6;
"Investm e nt Serv ices Rules" ref e rs to Rules issued by th e competent authority under various articles of this Act;
"licence" means a collective investment scheme licence or an investment services licence;
"licence holder" means a person who holds a licence;
"Malta’ s i n ternatio nal co mm itm ents" m eans Malt a’ s commit men t s, respo n sibi liti es and obli g ation
s ari s i ng o u t of membership of, or af filiation to, or relationship with, any int e rnat io nal , gl ob al or regi ona l o
rgan i sati on s o r grou pin g of countries or out of any treaty, convention or other international agreement, however called,
whether bilateral, multilateral, to which Malta is a party;
" M embe r S t at e" me an s a Me mbe r S t a t e o f th e Eu rope a n
Communities;
"MIFID Directive” means Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC
and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC, as
amended from time to time, and includes any implementing measures that have been or may be issued thereunder;
"Minister" means the Minister responsible for finance;
"overseas regulatory authority" means an authority in a country or territory outside Malta that is not a Member State or
EEA State which exercises any regulatory or supervisory function in relation to financial services corresponding to a function of
the competent authority as defined in the Malta Financial Services Authority Act;
"participants" means the persons who participate in or receive, or are to participate in or receive, profits or income arising
from the acq ui sit i o n , h o l d i n g, ma nag e m e n t o r di sp osal of th e p r op erty comprised in a collective investment
scheme or sums paid out of such profits or income;
"prescribed" means prescribed by regulations made under this
Act;
Cap. 330.
Cap. 386.
Cap. 345. Cap. 386.
Cap. 252.
"prospectus" has the meaning assigned to it in article 2 of the Companies Act, and the word "shares" therein shall be read as including a reference to the word "unit";
"qualifying shareholding" means a direct or indirect holding in a company which represents ten per centum or more of
the share capital or of the voting rights referred to in Articles 9 and 10 of D i r ective 2 004/109 /EC of the European Parliament and of the Co uncil of t h e 15 Decem b er 2004 on t h e harm oni zat i on of transparency requirements
in relation to information about issuers whose securities are admitted to trading and amending Directive
2001/34/EC t a k i ng in to acco unt t h e conditi ons regardi ng the aggregation thereof laid in that Di rective, or whi c h m a
kes it
possible to exercise a significant influence over the management of the company in which that holding subsists, and "qualifying
shareholder" shall be construed accordingly:
Provided that in determining whether the criteria for a qualifying shareholding are fulfilled, the competent authority shall not
take into account voting rights or shares which investment service s licence holders, Europ ean Investment Firms or credit i n
stitu tion s m a y ho ld as a r e su lt o f p r ov idin g th e ser v ice o f
un derw rit i ng o r p l acin g of fin a ncial in stru ments on a fi r m commitment basis in terms of point 6 of Section A to Annex
1 to the MIFID Directive, provided that those rights are, on the one hand, not exercised or otherwise used to intervene in the management of the issuer
and, on the other, disposed of within one year of acquisition;
"reg ulated m a rket" has the m ean ing assigned to it und er the
Financial Markets Act;
"subsidiary" has the same meaning as that given to the term by article 2 of the Companies Act;
"UCITS Directive" means Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of l a ws, regul ation s an d adm i ni strat i ve
provi sions relati ng to undertakings for collective investment in transferable securities (UCITS) (recast), as amended from time
to time, and includes any implementing measures that have been or may be issued thereunder;
"unit" means any representation of the rights and interests of participants in a collective investment scheme;
"working days" shall not include Saturdays and the days referred to in the National Holidays and Other Public Holidays Act.
(2) In this Act and in any regulations made thereunder, if there is any conflict between the English and Maltese texts, the English
text shall prevail.
(3) The objective of this Act is, in part, to transpose and implement the provisions of the MIFID Directive and the UCITS Directive, and consequently this Act and any regulations adopted thereunder shall be interpreted and applied accordingly.
LICENSING REQUIREMENTS
(2) No body corporate, unincorporated body or association formed in accordance with or ex isting under the laws of Malta,
shall provide or hold itself out as providing an investment service in or from within a country, territory or other place outside
Malta unless it is in possession of a valid investment services licence.
(3) The competent authority may by notice in writing to any person determine that -
(a) a service falls within the First Schedule when provided in relation to an instrument; or
(b) an instrument, contract or right falls within the Second
Schedule and whether or not issued in Malta;
and su bject to any appeal under article 19 with respect to such person the determination by the Competent Authority unless over ruled
by the Tribunal shall be conclusive for all purposes of this Act.
Competent authority. Added by:
XVII. 2002.137. Substituted by: X. 2011.24.
Requirement of licence for investment services. Amended by: XVII. 2002.138.
(2) Subject to the provisions of subarticle (3), no collective investment scheme formed in accordance with or existing under
the laws of Malta shall issue or create any units or carry on any activity in or from within a country, territory or other place
outside Malta unless there is in respect of it a valid collective investment scheme licence.
(3) No collective investment scheme shall be precluded by the provisions of subarticle (1) from issuing or creating such units
or from taking such steps as may be necessary for the incorporation or, as the case may be, the establishment of the scheme or from
taking such step s as may be ne ces sa ry for s ecuring the authorisation of the scheme by the competent authority.
APPLICATION, GRANT, REVOCATION, ETC., OF LICENCES
(a) contain or be accompanied by such information and particulars, in addition to those required by this article, as the competent
authority may require or as may be prescribed;
(b) be verified in the manner and to the extent required by
Requirement of licence for collective investment scheme.
Application for a licence.
the competent authority, or as may be prescribed;
(c) contain the address in Malta for service on the applicant of any notice or other document required or authorised
to be served on him by or under this Act;
(d) in the case of an investment services licence, be accompanied by a programme of operations setting out such matters as
may be required to be set out by the competent authority from time to time;
(e) in the case of a collective investment scheme licence, specify the nature of the collective investment scheme concerned; and
(f) be accompanied by such fee as may be prescribed in respect of the licence applied for.
Power of competent authority to refuse or grant licence. Amended by:
XVII. 2002.139; IV. 2003.174; XX. 2007.62; XIX. 2010.52.
Provided that the competent authority shall not -
(a) (i) grant an investment services licence unless it is satisfied that the applicant is a fit and proper person to provide
the investment services concerned and that the applicant will comply with and observe any Investment Services Rules
and regulations made under this Act and applicable to him;
(ii) grant an investment services licence for the provision of any investment service other than acting as trustee or
custodian in relation to a collective investment scheme:
(a) if the applicant is a body corporate, unless it has both its head office and registered office in Malta;
(b) if the applicant is a body corporate with no registered office under its national law, unless it has its head office in
Malta; or
(c) if the applicant is not a body corporate unless the applicant’s head office is in Malta;
(b) grant a collective investment scheme licence unless it is satisfied that the scheme will comply in all respects with any Investment
Services Rules and regulations made under this Act and applicable to it and that its directors, and officers, or in the
case of a trust, its trustees, are fit and proper persons to carry out the functions required of them in connection
with the scheme;
(c) grant a licence to an applicant unless the relevant European regulatory authorities have been consulted in the instances
referred to in article 17C.
(2) (a) In granting a licence the competent authority may
s u bject it to such conditions as it may deem appropriate, and having granted a licence it may, from time to time, vary or
revoke any condition so imposed or impose new conditions.
(b) For the better carrying out of the provisions of this Act, the competent authority may, from time to time, issue and publish
Investment Service Rules which shall be bi nding on licence h olders and o thers as m ay b e specified therein. Such Investment Service
Rules may lay d own ad ditional requirements and condit ions in relation to activities of licence holders, the conduct of their
business , their rela tions with customers, the public and other parties, their responsibilities to the competent authority, reporting
requirements, financial resources, capital adequacy and related requirements, and any other matters as the competent authority may
consider appropriate.
(3) When considering whether to grant or refuse to grant a licence the competent authority shall, in particular, have regard
to -
(a) the protection of investors and the general public;
(b) the protection of the reputation of Malta taking into account Malta’s international commitments;
(c) the promotion of competition and choice; and
(d) in the case of a collective investment scheme licence, the reputation and suitability of the applicant and all other parties
connected with the scheme.
(4) Every licence shall specify the investment service which the holder thereof has been authorised to provide or, as the case may
require, the class of collective investment scheme to which the licence relates.
(5) Without prejudice to the generality of subarticle (2), the conditions to which the competent authority shall subject a licence
may be made applicable, or be prescribed to be applicable, to -
(a) all investment services licences or all collective investment scheme licences, as the case may be;
(b) certain categories of licences;
(c) all licences granted to certain categories of holders;
(d) all licences in relation to particular services or schemes, as the case may be.
(6) Within six months from the date of the submission of a properly completed application form together with the requisite documentation,
the competent authority shall inform an applicant of its decision whether or not to grant a licence.
(7) Any requirement in this Act that a person be a fit and proper person to carry out certain activities or functions
shall be interpreted as a requirement not only that such person be a fit and proper person to carry out such activities or functions,
but also that any qualifying shareholder or members, director of officer of such
person, and, in the case of a trust, each one of its trustees, be a fit and proper person to carry out such activities or functions.
(8) (a) Where close links exist between an applicant and any other person the competent authority shall:
(i) only grant a licence if it considers that such close links do not prevent it from exercising effectively its
supervisory functions; and
(ii) refuse to grant such a licence if it considers that the laws, regulations or administrative provisions
of any country outside Malta governing one or more persons with whom the applicant has close links, or their enforcement,
prevent the effective exercise of its supervisory functions.
(b) The competent authority may from time to time, by m eans of Inv e st ment Service Ru les und er th is Act define the circumstances
in which "close links" are to be regarded as existing between any t w o or more persons.
(9) The competent authority shall establish a register of all holders of an investment services licence. This register,
which shall be publicly available, shall also indicate the services in relation to which each investment services licenc e was issued
and shall be updated on a regular basis.
Power of competent authority to cancel or suspend licences.
Amended by: XVII. 2002.140; XX. 2007.63.
(2) In the case of an investment services licence, the competent authority may cancel or suspend a licence -
(a) if it considers that the holder thereof is not a fit and proper person to provide the investment service he is authorised to
provide; or
(b) if it considers that the holder thereof does not fulfil the requirements of, or has contravened, any of the provisions
of this Act or of any Investment Services Rules or regulations made thereunder, or has failed to satisfy or comply with any obligation
or condition to which he or the licence is subject by virtue of or under this Act; or
(c) if the competent authority has been furnished by or on behalf of the licence holder with information which is false, inaccurate
or misleading; or
(d) if the licence holder has not commenced to provide the service he has been authorised to provide within the time provided
for in the licence or has ceased to provide such service; or
(e) if it considers it desirable to cancel or suspend the licence for the protection of investors and the general public,
and the reputation of Malta taking into account
Malta’s international commitments; or
(f) at the request of the licence holder;
(g) in any of the circumstances under which the competent authority would have been precluded from issuing the licence under this
Act or where under this Act it would have been entitled to refuse the grant of such licence; and
(h) if the licence holder thereof has obtained the licence by making false statements or by any other irregular means.
(3) In the case of a collective investment scheme licence, the competent authority may cancel or suspend a licence -
(a) if it considers that the directors, officers or trustees of the scheme are not fit and proper persons to carry out the functions
required of them in connection with the scheme; or
(b) if it considers that the scheme to which the licence refers does not fulfil the requirements of any provision of this Act
or of any Investment Services Rules or regulations made thereunder, or there has been a contravention of any such provision
as aforesaid, or an obligation or condition to which the scheme or the licence is subject by virtue of or under this Act
has not been satisfied or complied with; or
(c) if information has been furnished to the competent authority by or on behalf of or in relation to the scheme
which is false, inaccurate or misleading; or
(d) if the scheme has not commenced the activities which it was authorised to carry on within the time provided for in the licence
or has ceased to carry on such activities; or
(e) if it considers it desirable to cancel or suspend the licence for the protection of investors and the general public and
the reputation of Malta taking into account Malta’s international commitments; or
(f) at the request of the manager or trustee or custodian of the scheme, or their equivalent.
(a) to vary any condition to which the licence is subject or to impose a condition thereon; or
(b) to refuse an application for a licence or to cancel or suspend a licence,
it shall give the applicant or, as the case may be, the licence holder or the manager and trustee or custodian of a collective investment
scheme, or their equivalent, notice in writing of its intention to do so, setting out the reasons for the decision it proposes to
take.
(2) Every notice given under subarticle (1) shall state that the
Notification of proposed refusal, variation, cancellation or suspension of a licence.
Amended by: XVII. 2002.141.
recipient of the notice may, within such reasonable period after the service thereof as may be stated in the notice (being a period
of not less than forty-eight hours and not longer than thirty days), make representations in writing to the competent authority giving
reasons why the proposed decision should not be taken, and the competent authority shall consider any representation so made before
arriving at a final decision.
(3) The competent authority shall as soon as practicable notify its final decision in writing to any of the persons to whom notice
is to be given under subarticle (1).
Changes in information; payment of fees. Amended by: XVII. 2002.142.
OBLIGATIONS OF LICENCE HOLDERS AND OTHERS
(2) Every holder of a licence shall pay to the competent authority such periodic fee, and within such time, as may from time to time be prescribed.
Persons providing administrative services.
Added by:
XVII. 2002.143.
Amended by:
XX. 2007.62;
XVII. 2009.4.
(2) The competent authority may from time to time, issue I nvestment Serv ice Rules layi ng dow n the requ irements and
conditions for granting recognition, providing for the refusal of recognition and for the variation, cancellation and supervision
of recog n i tio n and gen e rally regu lat i ng t h e provi sion o f such adm inistrative services. Su ch Invest ment Ser vice Rules
m ay in particular include provision for the following matters:
(i) establishing which activities constitute administrative services for the purposes of this article;
(ii) the form and the content of applications to the competent authority for recognition;
(iii) the application, annual and other fees payable in respect of recognition;
(iv) the obligation to supply documentation and other information to the competent authority;
(v) measures to allow the competent authority to
ensure compliance by recognised administrators with this Act and Investment Service Rules issued thereunder;
(vi) arrangements for the exchange of information with other regulatory bodies both in Malta and overseas;
(vii) providing for the mutual recognition of persons recognised as fit to provide such services outside Malta;
(viii) to provide for the imposition of administrative penalties up to a maximum of forty-five thousand euro
(€45,000) or for other administrative sanctions in case of any breach of the provisions of this article or of the
applicable Investment Services Rules or of any of the conditions attached to a recognition certificate, where any;
(ix) generally any other matter ancillary or connected with the above.
(3) Where the competent authority refuses, varies, cancels or suspends a recognition issued in terms of this article or imposes
an adm i n i s tr at iv e p e na lt y in t e r m s of th e ap pl ic abl e In vest m e nt Servic es Rules , a n appe al sha ll lie
to the Financial Ser v ices Tr ibunal and the provisions of article19(3) shall apply to such appeal.
(a) acquire, directly or indirectly, a qualifying shareholding in an investment services licence holder;
(b) increase, directly or indirectly, an existing shareholding which is not a qualifying shareholding so as to
cause it to become a qualifying shareholding in an investment services licence holder; or
(c) further increase, directly or indirectly, such qualifying shareholding in a credit in an invstment services licence holder
as a result of which the proportion of the voting rights or of the capital held would reach or exceed twenty per centum, thirty
per centum or fifty per centum or so that the investment services licence holder would become its subsidiary,
(hereinafter referred to in this Act as the "proposed acquisition"), shall notify the competent authority in writing of
any such decision, indicating the size of the intended shareholding and providing any rel e van t i n form ati on as an d i n the
manner that the competent authority may by Invstment Services Rules require, including the for m in w h ich such not ifi c at ion
shall b e mad e and the cr iteri a adopted by the competent authority in determining whether such person is a fit and proper person.
Participation in an investment services licence holder.
Amended by: XVII. 2002.144. Substituted by: XVII. 2009.5.
(2) Notwithstanding anything contained in any other law, any person who has taken a decision either to -
(a) dispose, directly or indirectly, of a qualifying shareholding in an investment services licence holder;
(b) reduce, directly or indirectly, a qualifying shareholding so as to cause it to cease to be a qualifying
shareholding; or
(c) reduce, directly or indirectly, a qualifying shareholding so that the proportion of the voting rights or
of the capital held would fall below twenty per centum, thirty per centum or fifty per centum or so that the investment
services licence holder would cease to be its subsidiary,
shall notify the competent authority in writing of any such decision indicating the size of the intended shareholding and providing
any relevant information as and in the ma nner that the c o mpetent authority may, by Investment Services Rules require.
(3) Subarticles (1) and (2) shall apply irrespective of whether or n o t any of the relevany sh ar es li st ed on a reg u lated
market wit h in the m e aning of the Financial Markets Act or on an equivalent market which is not situated in a Member State or an EEA State.
(4) It shall be the duty of an investment services licence holder to notify the competent authority forthwith upon becoming aware
that any person has taken any action set out in subarticles (1) or (2).
(5) If any person or any investment services licence holder takes or decides to take any action set out in subarticles
(1) or (2) without notifying the competent authority or obtaining its approval in terms of article 10A, then, without prejudice to
any other penalty wh ich may be im posed under t his Act, th e com petent authority shall have the power to make an order:
(a) restraining such person or investment services licence holder from taking, or continuing with, such action;
(b) declaring such action to be void and of no effect;
(c) requiring such person or investment services licence holder to take such steps as may be necessary to restore the
position existing immediately before the action was taken;
(d) restraining such person or investment services licence holder from exercising any rights which such action would, if lawful,
have conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
or
(e) restraining such person or investment services licence holder from taking any similar action or any other action within
the categories set out in subarticles (1) and (2).
(6) Without prejudice to any other provision of this Act, where
the influence exercised by any person acquiring or proposing to acquire a qualifying shareholding is, or is likely to, operate against
the sound an d prudent m a nagement of an investment services lice n ce holder, the c o mpete n t authority may is sue a notice of
objection and exercise any of the powers assigned to it under this Act to put an end to such situation, including the power to issue
dire ctive s as it may de em reasona b le a n d appropria t e in the circumstances.
(7) A copy of any notice served on the person concerned in terms of subarticle (6) shall be served on the company to whose shares
it relates.
(8) The competent authority, may, by means of Investment Services Rules issued under this Act, indicate the circumstances
when persons are to be regarded as "acting in concert".
(2) The competent authority shall have a maximum of sixty working days as from the date of the written acknowledgement of r
e ceipt of th e not ifi c ati on requi red u nder art i cle 10 (1) and al l documents required by the competent authority to be attached
to such notification (hereinaft er re ferred to in t h is Act as the "assessment period") to carry out an assessment on
the basis of such information as may be determined by Investment Services Rules issued for this purpose.
(3) The competent authority shall inform the proposed acquirer of the date of the expiry of the assessment period at the time
of acknowledging receipt.
(4) The competent authority may, during the assessment period and no later than the fiftieth working day of such period, request
any further information that is neces sary to complete the asse ssment. Such a re q u est shall be made i n w r iti ng an d sh al
l specify the additional information needed.
(5) During the period between the date of request for additional informa t ion by the competent au th orit y and the recei p t
of a response thereto by the proposed acquirer, the assessment period s h all be interrupted. The inte rruption period shall not
exceed twenty working days. Any furthe r requests by the competent authority for completion or clarification of the information shall
be at its discretion but shall not resu lt in an interruption of such period.
(6) The competent authority may extend the interruption refer r ed to in su bart icle (5) up to thi r ty wo rki ng
d a ys if th e proposed acquirer is:
(a) situated or regulated in countries that are not Member
States or EEA States; or
(b) a person not subject to supervision under:
Assessment procedure. Added by: XVII. 2009.6. Amended by: X. 2011.25.
(i) the MIFID Directive; (ii) the UCITS Directive;
(iii) Council Directive 92/49/EEC of 18 June 1992 on the co-ordination of laws, regulations and administrative provisions relating to direct insurance
other than life assurance and amending Directives 73/239/EEC and 88/357/ EEC (third non-life insurance Directive);
(iv) Directive 2002/83/EC of the European
Parliament and of the Council of 5 November
2002 concerning life assurance;
(v) Directive 2005/68/EC of the Eurpean Parliament and Council of 16 November, 2005 on reinsurance amending Council Directives 73/
239/EEC, 92/49/EEC as well as Directives 98/
78/EC and 2002/83/EC; or
(vi) Directive 2006/48/EC of the European Parliament and of the Council of 14 June, 2006 relating to the taking up and pursuit of the business
of credit institutions (recast).
(7) The competent authority shall, upon completion of the assessment referred to in subarticle (2) and not later than the
date of the expiry of the assessment period, issue a notice:
(a) granting unconditional approval to the proposed acquisition;
(b) granting approval to the proposed acquisition subject to such conditions as the competent authority may deem appropriate;
or
(c) refusing the proposed acquisition.
(8) In making the assessment referred to in subarticle (2), the competent authority shall neither impose any prior conditions in
respect of th e level of sh ar eh ol di ng th at m u st be acqu i r e d n o r examine the proposed acquisition in terms of the economic
needs of the market.
(9) The competent authority may refuse the proposed acquisition only if there are reasonable grounds for doing
so on the b a sis o f th e criter i a set ou t in the I nvestm e n t Services Rul e s referred to in article 10(1) or if the information
provided by the proposed acquirer is incomplete.
(10) If the competent authority decides to refuse the proposed acquisition, it shall, within two working days, and not exceeding
t he assessm en t p erio d, inform th e proposed acquirer i n w rit ing specifying the reasons for such decision. The competent authority
may, whether at the request of such proposed acquirer or not, issue a public statement indicating such reasons.
(11) If the competent authority does not refuse the proposed acquisition in writing within the assessment period, such proposed
acquisition shall be deemed to be approved.
(12) Without prejudice to the provisions of article 22, where a
qualifying shareholding in an investment services licence holder is acquired notwithstanding the refusal of the competent authority,
the exercise of the corresponding voting rights shall be suspended and any of the votes cast in contravention of this subarticle
shall be null and void.
(13) The competent authority may fix a maximum period for co ncludin g the p r oposed acqui si tion an d extend it wh ere appropriate.
(14) Notwithstanding the provisions of subarticles (1) to (6), wh ere two or more proposals to acquire or increase qualifying shareholdings
in the same investment services licence holder have been notified to the competent authority, the latter shall treat the proposed
acquirers in a non-discriminatory manner.
(a) a credit institution, an assurance undertaking, insurance undertaking, reinsurance undertaking, investment
firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in
which the acquisition is proposed;
(b) the parent undertaking of a credit institution, assurance undertaking, insurance undertaking, reinsurance
undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other
than that in which the acquisition is proposed;
(c) a person controlling a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking,
investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that
in which the acquisition is proposed.
(2) The competent authority shall, without undue delay, p r ovi de any i n formati on which is essenti a l or r e l
e vant for the assessment referred to in article 10A(2) to the European regulatory aut horit y or overseas regul ato r y auth orit
y requesting such in fo rm at io n. Up on r e q u est , the competent authority shall communicate to th e European regulatory authority
or overseas r e g u lat o ry auth ori t y all relevant in for m at io n and sh al l com m unicate on its own initiative all
essential i n formation. A decision by the competent authority in terms of article 10A shall
i ndicat e any v i ew s or reserva tions expressed b y the Europ e an regulatory authority or overseas regulatory authority responsible
for the proposed acquirer.
Co-operation with European regulatory authorities and overseas regulatory authorities in case of acquisitions. Added by:
XVII. 2009.7.
reconstructions, divisions and changes in share capital or voting rights.
Added by: XVII. 2009.8.
and without prejudice to article 10(1) and (2), the consent of the competent authority given in writing shall be required before
an investment services licence holder may lawfully:
(a) sell or dispose of its business or any significant part thereof;
(b) merge with any other company, whether licensed under this Act or not;
(c) undergo any reconstruction or division; or
(d) increase or reduce its nominal or issued share capital or effect any material change in voting rights.
(2) It shall be the duty of all directors and qualifying shareholders of an investment services licence holder
to notify the competent authority forthwith in writing, upon becoming aware that such investment services licence holder intends
to take any of the actions set out in subarticle (1).
(3) Within three months of receipt of such notification or receipt of su ch information as the competent au thority may
lawfully require, whichever is the later, the competent authority shall issue a notice -
(a) granting unconditional consent to the taking of the action;
(b) granting consent to the taking of the action subject to such conditions as the competent authority may deem appropriate; or
(c) refusing consent to the taking of the action,
and if it refuses to grant consent, it shall inform the person or the investment services licence holder concerned in writing for
the reason for its refusal.
(4) If any person or any investment services licence holder takes or decides to take any action set out in subarticle
(1) without obtaining the consent of the competent authority, then, without prejudice to any other penalty which may be imposed
under this Act, the competent authority sh all have the p o wer to make an order:
(a) restraining such person or investment services licence holder from taking, or continuing with, such action;
(b) declaring such action to be void and of no effect;
(c) requiring such person or investment service licence holder to take such steps as may be necessary to restore the
position existing immediately before the action was taken;
(d) restraining such person or investment services licence holder from exercising any rights which such action would, if lawful,
have conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
(e) restraining such person or investment services licence holder from taking any similar action or any other action within
the categories set out in subarticle (1).
11.(1) (a) No collective investment scheme, whether licensed or not, shall issue or cause to be issued a prospectus in or fr om wi th in Malt
a un less th e pr osp e ct us has b een approved by the Competent Authority.
(b) No person, other than licence holders, may issue or cause to be issued an investment advertisement in or from within Malta
unless its contents have been approved by a licence holder.
(2) The competent authority may, from time to time, issue such Investment Service Rules or directives to licence holders as it
may consider appropria t e in orde r t o set mi ni mu m st and a rd s an d requirements which are to be observed by licence holders
when issuing or approving investmen t advertisement s or i s suing a prospectus in accordance with subarticl e (1). Such Investm
ent Service Rules or directives may also include provision for such exem ptions or conditi ons as ma y be specif ied therein and
may make different provision for diff erent cases or classes of cases, under such terms and conditions as may be prescribed.
(3) The competent authority may impose such conditions, limitations and restrictions on a licence holder with respect to
the issue or approval of investment advertisements, as it may consider appropriate.
REGULATORY AND INVESTIGATORY POWERS
(a) amend the definition of "collective investment scheme" contained in article 2, as well as
the definition of "investment service" contained in article
2 and the First and Second Schedules;
(b) regulate investment services and collective investment schemes, as well as services provided and activities carried on in
conjunction therewith or in relation thereto; providing for any matter he may deem expedient including the creation
and exercise of rights by or for the benefit of the public, the imposition of duties and obligations on the holders of a licence
or persons responsible for the management or administration thereof and the regulation of any fees and, or
any other charges imposed directly or indirectly on investors; provide for the safekeeping and custody of the property
of collective investment schemes and for the requirement to appoint a custodian, and prescribe and regulate
in the most extensive manner the functions, duties, responsibilities
Prospectus and investment advertisements. Substituted by: XVII. 2002.145. Amended by: XX. 2007.62.
Minister’s power to make regulations. Amended by: XXV.1995.432; XVII. 2002.146; IV. 2003.175; XIII. 2004.79; XII. 2006.62;
XX. 2007.64;
L.N. 425 of 2007;
XIX. 2010.53;
X. 2011.26.
qualifications and other eligibility criteria necessary to act as custodian, including residence qualifications; provide for
the protection of the property of the schemes in the event of the insolvency of the custodian, and for
the purpose of this paragraph "custodian" shall include a sub-custodian; require the keeping of records with respect
to the transactions and financial position of collective investment schemes and for the inspection of those records, and prescribe
reporting and disclosure requirements, including the preparation of periodical reports with respect to the schemes and the
furnishing of those reports to the shareholders, unit-holders or other participants in the said schemes, and to others;
and provide for the regulation of the free circulation of units of collective investment schemes and to regulate the management
companies of such schemes;
(c) establish schemes or other arrangements for the compensation of investors in cases where licence holders or
any categories thereof as may be specified, are unable to satisfy their obligations towards investors or claims in respect
of any liability incurred by them in connection with the carrying out of any activity in regard to which they are licensed, and
to regulate the management and the financing of any such schemes or arrangements and, the contributions and levies to be paid
thereto, to set the minimum and maximum levels of compensation payable thereunder and may under such schemes and
arrangements distinguish between different classes of investors and, exclude certain classes from compensation, and to make
provision for the regulation of and for other aspect related to such schemes or arrangements and may moreover provide
that such schemes or arrangements as may be prescribed shall have a legal personality distinct from that of
the contributors thereto and of the competent authority and provide for the judicial and legal representation thereof; and such
schemes shall be exempt from the payment of income tax as from the date of establishment of such schemes;
(d) define the criteria for determining whether a holding is an indirect holding for the purposes of determining whether a qualifying
shareholding exists;
(e) regulate the promotion or sale by or on behalf of any person, and by any means, of an investment service or of a collective
investment scheme or of any instrument, including the criteria and procedures for the granting or refusing of consent
by the competent authority pursuant to the provisions of article 11 of this Act;
(f) amend the provisions of article 18 on the
circumstances in which auditors are obliged to communicate information to the competent authority, to prescribe regulations
governing the disclosure by auditors of information pursuant to article 18 and to establish supervisory and disciplinary procedures
for auditors in respect of their duties under the provisions of article 18;
(g) regulate the drawing-up, approval, publication and distribution in Malta of prospectuses relating to the offer of transferable
securities authorised or otherwise approved, in a country or countries outside Malta and to make provision for the recognition
of such prospectuses taking into account Malta’s international commitments;
(h) provide for and regulate the payment by any person, body or scheme, as the case may be, of licence or other fees and such other
charges payable to the competent authority in respect of any matter provided for, by or under this Act or any regulations
made under this article, as may be prescribed;
(i) exempt any person, service, instrument, collective investment scheme, or advertisement from any one or more of the
provisions of this Act subject to such variations, additions, adaptations and modifications as may be prescribed and subject
to such conditions or other requirements, including other forms of authorisation and notification procedures, as
may be prescribed;
(j) transpose the requirements of Directive 2002/87/EC of the European Parliament and of the Council of 16
December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in
a financial conglomerate, as may
be applicable to a licence holder, as amended from time to time, and including any implementing measures issued
thereunder;
(k) transpose, implement and give effect to the provisions and requirements of the MIFID Directive and the UCITS Directive;
(l) establish financial resources requirements for licence holders and to transpose, implement and give effect to the provisions
of Directive 2006/49/EC of the European Parliament and of the Council of 14 June
2006 on the capital adequacy of investment firms and credit institutions (recast), as may be amended from
time to time, and including any implementing measures issued thereunder;
(m) provide for reporting and other requirements and conditions which a person operating a multilateral trading facility
must satisfy, on a continuing and ongoing basis and to establish the circumstances and
Cap. 386.
Cap. 16.
the manner in which requirements and conditions may be varied, suspended or revoked, and to transpose the requirements of the
MIFID Directive and UCITS Directive thereon;
(n) transpose, implement and give effect to the provisions and requirements of Directives, Regulations and any other legislative
measures of the European Union requiring transposition and, or implementation, as they may be amended from time to time,
including any implementing measures that have been or may be issued thereunder and relating to licence holders and others
as may be specified therein or to any other matter falling within the terms of this Act and for this purpose to provide
that any provision in any other law shall not apply to matters falling under the regulations, and, in particular, may provide that
in so far as any of the provisions of the regulations are inconsistent with the provisions of the Companies Act, such provisions shall prevail, and the provisions of the Companies Act shall, to the extent of the inconsistency, not apply;
(o) provide that any one or more of the bodies mentioned in Article 107(3) of the UCITS Directive may, in the interests of consumers, and in accordance with the applicable laws of Malta, take action before the courts or
administrative bodies of Malta, to ensure that the provisions of this Act and the Investment Services Rules and regulations
issued hereunder transposing the UCITS Directive are implemented;
(p) prescribe anything that is to be or which may be prescribed;
(q) provide for any matter incidental to or connected with any of the above.
(2) (A) Regulations made under this article may also contain provision for enabling a pe rson who has ente red, or offered to enter,
into an investment agreement with the holder of a licence to rescind the agreement or withdraw the offer within such period and in
such manner as may be prescribed, and in particular, but without prejudice to the generality of the foregoing, may make provision
-
(a) for requiring the service of notice with respect to the rights exercisable under the regulations;
(b) for the restitution of property and the making or recovery of payments where those rights are exercised;
(c) for such other matters as are incidental to or connected with any of the above.
(2) (B) Regulations made under this article may make provisio n for the constitution of common funds for investme
nt purposes in the form of a collective investment scheme by contract or other arrangement in writing and may exempt such funds from
the application of any article or provision of the Civil Code under Ti tl e V of Part I of Bo ok Seco n d wi th such mod i f i catio ns an d
variations as may be established.
(3) Regulations made under this article, may be made subject to such exemptions or conditions as may be specified therein, may
m a k e di ff erent pr ov isio n f o r diff erent ca ses, circumstanc e s or purposes and may give to the competent authority such
powers of adaptation of the regulations as may also be so specified.
(4) Where regulations have been issued in terms of this article, the competent aut hority may issue Investment Services Rules
within the meaning of article 6 of this Act for the better carrying out and to better implement the provisions of the regulations.
(5) Regulations made under this article may impose punishments or other penalties in respect of any contravention
or failure of compliance not exceeding a fine (multa) of one hundred and fifty thousand euro (€150,000) or imprisonment for a term not exceeding one year, or both such fine and imprisonment.
(6) The exercise of any of the powers assigned under this article shall be subject to any obligations or rights arising
from Malta’s international commitments.
(i) any person who is or was providing, or who appears to be or to have been providing, an investment service;
or
(ii) a collective investment scheme; or
(iii) any person who is or was carrying on, or who appears to be or have been carrying on activities in connection with such a scheme;
or
(iv) any person who has issued, or appears to have issued an advertisement falling within the provisions of article
11(1); or
(v) any other person who appears to be in possession of relevant information,
to do all or any of the following:
(a) to furnish to the competent authority, at such time and place and in such form as it may specify, such information
and documentation as it may require, including the power to require existing telephone and existing data traffic records,
with respect to any such service, scheme or advertisement as aforesaid, or with respect to any person with whom the licence holder
has close links within the meaning of article 6;
(b) to furnish to the competent authority any information or documentation aforesaid verified in such manner as it may specify;
(c) to attend before the competent authority, or before a person appointed by it, at such time and place as it may specify, to
answer questions and provide information and documentation with respect to any
Power of competent
authority to require information. Amended by:
XVII. 2002.147; XX. 2007.65.
such service, scheme or advertisement as aforesaid.
(2) The competent authority may take copies of any documents furnished or provided under this article.
(3) Where the person required to provide information or docu m entation u nder t h is article does no t hav e the relevant
information or documentation, he shall disclose to the competent authority where, to the best of his knowledge, that information
or documentation is, and the competent authority may require any person, whether indicated as aforesaid or not, who appears to it
to be in possession of that information or documentation, to provide it.
Cap. 9.
Cap. 204.
(4) A statement made and documentation provided in pursuance of any requirement under this article may be used in
evidence against the person making the statement or providing the documentation as well as against any person to whom they relate.
(5) The provisions of this article shall not apply to information or documentation whic h is privileged in accordance with the
provisions of article 642(1) of the Criminal Code.
(6) The power to require the production of documentation under the provisions of this article shall be without prejudice
to any lien o r char g e claimed b y any p e rson in rel a t i on to such documentation.
(7) Where the competent authority has appointed a person under subart icle (1)( c ), su ch p e rson shall, for th e pu rposes of ca rryi ng o u t h i s fu nct i o n s un der h i s ap poi nt m e nt , h a ve all t
h e powers conferred on the competent authority by this article and a requirement made by him shall be deemed to be and have the
same force and effect as a requirement of the competent authority.
(8) Without prejudice to the other provisions of this article, a licence holder may be required to submit to the Central Bank
of Malta such information as the Bank may reasonably require for the discharge of its duties under the Central Bank of Malta Act.
Appointment of inspectors. Amended by: XX. 2007.66.
(2) An inspector appointed under subarticle (1) -
(a) may also, if he thinks it necessary or expedient for the purposes of that investigation, investigate the affairs of any person
or scheme mentioned in subarticle (1);
(b) shall have and may exercise all the powers conferred on the competent authority by article 13, and any requirement made
by him shall be deemed to be and have the same force and effect as a requirement of the competent authority;
(c) may, and if so directed by the competent authority shall, make interim reports and on the conclusion of his investigation
shall make a final report to the said
authority.
(3) The competent authority shall have power to order that all expenses of, and incidental to, an investigation pursuant to this
article be paid by the persons or scheme concerned.
(4) For the purposes of this article inspectors may include an advocate, a person authorised t o ca rry on th e p r o f essi on
of accountant or auditor in terms of the Accountancy Profession Act, or a person considered by the competent authority as possessing suitable expertise to exercise such function.
Cap. 281.
(2) Without prejudice to the generality of the foregoing provisions of this article, a directive under this article
may -
(a) require anything to be done or be omitted to be done, or impose any prohibition, restriction or limitation, or any other requirement,
and confer powers, with respect to any transaction or other act, or to any assets, or to any other thing whatsoever;
(b) require a collective investment scheme and the manager of such a scheme, or his equivalent, and any other person
who may issue, redeem, sell or purchase units in the scheme, to cease the issue, redemption, sale, or purchase of units or all
or any combination of those activities, as may be specified in the directive or further directive;
(c) require that any person having functions in relation to the holder of a licence be removed or removed and replaced by another
person acceptable to the competent authority;
(d) require a collective investment scheme or its directors and shareholders, or the manager or trustee or custodian
of a scheme, or their equivalent, to wind it up by such date and in accordance with such procedure and other provisions as may
be specified in the directive or further directive;
(e) require a licence holder or any person who is or was providing, or who appears to be or to have been providing an investment
service to cease operations and to wind up its affairs, in accordance with such procedures and directions as may be specified
in the directive, which may provide for the appointment of a person to take possession and control of all documents, records, assets
and property belonging to or in the
Power to issue directives. Amended by: XVII. 2002.148; XX. 2007.67;
X. 2011.27.
Cap. 345.
possession or control of the licence holder or such other person;
(f) require the cessation of any practice that is contrary to the provisions adopted in the implementation of the MIFID Directive and the UCITS Directive;
(g) require the removal of a financial instrument from trading, on trading arrangements within the meaning of the MIFID Directive, other than on regulated markets in terms of the Financial Markets Act.
(3) The power to give directives under this article shall include the power to vary, alter, add to or withdraw any directive, as
well as the power to issue new or further directives.
(4) Where the competent authority is satisfied that the circumstances so warrant, it may at any time make public
any directive it has given under any of the provisions of this article.
Right of entry. 16. (1) Any officer, employee or agent of the competent authority, on producing, if required, evidence of his authority, may enter premises occupied by a person on whom a notice has been se rved under article 13 or whose a ffairs are being investigated under article 14, for the purpose of obtaining there the information or documents required by that notice, or otherwise for the purpose of the investigation, and of exercising any of the powers conferred by the said articles.
(2) Where any officer, employee or agent of the competent authority has reasonable cause to believe that if such notice
as is referred to in subarticle (1) were served it would not be complied w i t h o r th at an y do cum e nt s to w h ich i t c oul
d rel a te wou l d be rem o ve d, ta m p ered wi th or dest roy e d , s u ch perso n m a y, o n producing, if required, evidence
of his authority, enter any premises referred to in subarticle (1) for the purpose of obtaining there any in formation or docum en
ts sp ecified in the auth orit y, being information or documents that could have been required under such notice as is referred to
in subarticle (1).
(3) For the purposes of any action taken under the provisions of this article, the competent authority may request the assistance
of the Commissioner of Police, who may for such purpose exercise such powers as are vested in him for the prevention of offences
and the enforcement of law and order.
Administrative penalties and other measures.
Added by: XX. 2007.68. Amended by:
L.N. 425 of 2007; X. 2011.28.
case may be, an administrative penalty which may not exceed one hundred and fifty thousand euro (€150,000) for each infringement
or failure to comply, as the case may be.
(2) Administrative penalties or other measures that may be imposed by the competent authority on licence holders or others,
as may be specified, may be imposed in the form of a fixed penalty, a daily penalty, or both.
(3) The imposition by the competent authority of an adm i nistrati ve penalty in term s of t h is article shall be
without prejudice to any other consequence of the act or omission of the offender under civil or criminal law:
Provided that in all cases where the competent authority imposes an administrative penalty in respect of anything done or omitted
to be done by any person and such act or omission also co nst itutes a crim inal o ffence, no proceedi ngs may be taken or conti
nued ag ainst t h e said pers o n in respect of such criminal offence.
(4) The competent authority may, by means of a public statem en t, d i sclo se t h e nam e o f the person san c tio ned
, th e particular breach of the provisio n of this Ac t, regula tions or Investment Services Rules issued thereunder, and the penalty
or administrative measure imposed. The competent authority shall withhold such public disclosure where it deems that such disclosure
would seriously jeorpardise the financial markets, be detrimental to the interests of investors or cause disproportionate damage
to the parties involved.
16B. Any decision taken under this Act by the competent au t h o r i t y in terms of any provisions which transpose the MIFID Directive and the UC I T S D i recti v e , inclu d ing any regulat ions, I n v e st ment Serv ices Rul e s, or adm i n i str a t i v e p r ov isi ons made thereunder for
the said transposition, shall state the grounds on which such a decision has been based.
CO-OPERATION WITH EUROPEAN REGULATORY AUTHORITIES AND OTHER BODIES
17. (1) The competent authority shall act as the contact point in te rm s of and fo r the pu rposes of Ar ticle 56(1) of the MIFID Directive, and it shall also exercise its powers and duties as provided for in the UCITS Directive.
(2) The competent authority shall cooperate with other Eu rop e an regul at ory aut hori t i e s whenever nec e ssary
for the purpose of carrying out its duties and exercising its powers under the MIFID Directive and the UCITS Directive . It shall render the necessary assistance to other European regulatory authorities, in particular by exchanging information and
cooperating in any i n v e st ig at ory o r su pervi s ory fu ncti on . In t erm s o f the MIFID Directive and the UCITS Directive, the competent authority may use its powers for the purposes of cooperation even in cases where the conduct under investigation does
not constitute an infringement of any provisions of this Act, regulations or Investment Services Rules issued thereunder.
Obligation to state grounds for decisions.
Added by: XX. 2007.68.
Amended by: X. 2011.29.
Substituted by: XX. 2007.69.
Powers exercisable. Amended by: XVII. 2002.149; XX. 2007.70;
X. 2011.30.
(3) Upon receipt of a request from European regulatory au th orit ies desi gn ate d a s contact points wi th in t
h e in di vi d u al Member States or EEA States under Article 56(1) of the MIFID Directive, the competent authority shall immediately take the necessary measures in order to gather the information required for the carrying
out of its duties pursuant to the MIFID Directive. If the competent authority is not able to supply the required information im mediately, it shall notify the requesting European
regulatory authority of the reasons.
(4) At the time of communicating information to the European regulatory authorities, whether designated as contact points or not,
the competent authority may stipulate that the information must not be disclosed without its express agreement, in which case such
information may be exchanged solely for the purposes for which the competent authority had given its agreement.
(5) Where a European regulatory authority exchanging information with the competent authority stipulates at the
time of communication of the information that such information must not be disclosed without its express agreement, such information
may be used by the competent authority solely for the purpo ses for w h ich the Euro pean regu lato ry auth ori t y wou l d h a ve
g i ven it s agreement.
(6) Information received by the competent authority from contact points in the other Member States or EEA States may be transmitted
to other bodies or natural or legal persons, provided that:
(a) the express agreement of the contact points which disclosed the information is obtained; and
(b) the information is used solely for the purposes for which the contact points gave their agreement:
Provided that in duly justified circumstances the competent authority can transmit information to other bodies or natural or legal
persons without satisfying the conditions in paragraphs (a) and (b), in which case the competent authority shall immediately inform the contact point that sent the information.
(7) Where the competent authority receives confidential information from contact points in the other Member States or
EEA States or from overseas regulatory authorities or auditors under art i cl es 17 D and 18, o r when o t her bo dies or natu ral
or l e gal persons receive c o nfidential information from the competent authority, they may only use such confidential information
in the course of their duties, in particular:
(a) to check that the conditions governing the taking-up of the business of licence holders, including undertakings contributing
towards the business activity of UCITS are met and to facilitate the monitoring, on a non- consolidated or consolidated
basis, of the conduct of that business, especially with regard to the financial resources requirements;
(b) to monitor the proper functioning of trading venues
within the meaning of the MIFID Directive;
(c) to impose penalties or adopt other administrative measures and to consider representations received in their regard;
(d) in appeals under article 19;
(e) to investigate complaints received from consumers in terms of article 20 of the Malta Financial Services Authority Act; or
(f) in taking any decision in the implementation of the
UCITS Directive and the MIFID Directive.
(8) Subarticle (7) and article 26 shall not preclude the competent authority from exchanging information, in terms
of the UCITS Directive, with European regulatory authorities, where that information is to be divulged to:
(a) authorities with public responsibility for the supervision of credit institutions, investment
undertakings, insurance undertakings or other financial organisations, or authorities responsible for the supervision
of financial markets;
(b) bodies involved in the liquidation or bankruptcy of UCITS or undertakings contributing towards their business activity,
or bodies involved in similar procedures; or
(c) persons charged with carrying out statutory audits of the accounts of insurance undertakings, credit institutions, investment
firms or other financial institutions.
(9) Without prejudice to the powers of the competent authority under this Act or any other law, where the competent authority has
good reason to suspect that acts contrary to the provisions of the MIFID Dire ctive or the UCITS Directive are being or have been carried out on the territory of another Member State or EEA State by entities not subject to its supervision,
it shall notify this in as spec ific a manner as possible to th e con t a c t po in t i n th e o t h e r Member State or EEA State.
(10) Where the information in the possession of the competent authority had originated from a European regulatory authority or an
overseas regulatory authority, it may not be disclosed to a European regulatory authority or to any other third party without the
express agreement of the European regulatory authority or the overseas regulatory authority wh ich ha d transmitted it and, where
appropriate, solely for the purposes for which that authority had given its agreement.
(11) Where a European regulatory authority suspects that acts carried out by entities not subject to its supervision and which are
contrary to the provisions of the MIFID Directive or the UCITS Directive are being or have been carried out in Malta and notifies the competent authority to this effect, the competent authority shall take
appropriate action. The competent authority shall inform the notifying European regulatory authority of the outcome of any such
Cap. 330.
acti on and, to the ext e n t p o ssib l e, of sign ifi c ant in terim developments:
Provided that any such action taken by the competent authority shall be without prejudice to the powers and functions of th
e Eur o p e an r e gu lato ry aut h orit y th at h a s fo rw arded t h e information.
(12) Without prejudice to the foregoing provisions of this article, the competent authority may exercise the following powers
at the request of or for th e purpose of assistin g a Euro pean regulatory authority:
(a) the power to impose, revoke or vary conditions on the grant of a licence pursuant to the provisions of article
6(2);
(b) the power to cancel or suspend a licence under article
7(1);
(c) the powers of inquiry under article 13;
(d) the power to appoint inspectors under article 14; (e) the powers of intervention under article 15;
(f) the powers of entry under article 16;
(g) the power to communicate to the European regulatory authority information which is in the possession of the competent authority,
whether or not as a result of the exercise of any of the above powers.
(13) The competent authority shall have the powers conferred upon it by Article 101(8) of the UCITS Directive.
Co-operation in supervisory functions, on-site verifications or investigations. Added by:
XX. 2007.71. Amended by: X. 2011.31. Cap. 345.
Provided that in the case of a person holding a licence or ot her eq ui val e n t au th or isati o n fr om a Eur o p e an Regul ato
r y Authority and who is a remote member within the meaning of the MIFID Directive of a regulated market authorised in terms of the Financial Markets Act, the competent authority may communicate with such person directly, in which case the competent authority shall inform the contact
point of the home Member State of such person accordingly.
(2) If, upon the request for cooperation by the competent authority in terms of Article 101(5) of the UCITS Directive, a verification or an inve stiga t ion is c a rried out in a Mem b e r St ate by a E u ropean regulatory authority, the competent
authority may request that its own officers, employees or agents accompany the officials carrying out the verification or investigation,
and such officers, employees or agents shall, however, be subject to the overall control of such Member State.
(3) A European regulatory authority may request the coo p eratio n of the co mpetent autho r ity in car r yi
ng ou t it s supervi s o r y functi ons o r fo r an o n -sit e verifi cati on or i n an investigation, in which case the competent
authority shall, within
the framework of its powers:
(a) carry out the verifications or the investigation itself; or
(b) allow the requesting authority to carry out the verification or investigation, and, it may also, in terms of Article
101(5) of the UCITS Directive, request that its own officers, employees or agents accompany the European regulatory authority in carrying
out the verification or investigation; or
(c) allow inspectors or experts within the meaning of article
14 and auditors within the meaning of article 18 to carry out the verification or investigation.
17B. The competent authority may refuse to act on a request for cooperation in carrying out an investigation, onsite verification or supervisory
function under article 17A of this Act or to exchange information with European regulatory authorities designated as contact points
under Article 56(1) of the MIFID Directive, or with European regulatory authorities designated under Article 101(1) of the UCITS Directive for the purpose of carrying out duties and exercising powers thereunder only where:
(a) such an investigation, on-site verification, supervisory function or exchange of information might adversely affect the sovereignty,
security or public policy of Malta;
(b) judicial proceedings have already been initiated in respect of the same actions and against the same persons before
the courts of Malta; or
(c) a final judgment has already been delivered in relation to such persons for the same actions in Malta:
In any case above-mentioned, the competent authority shall notify the requesting European regulatory authority accordingly, p r o
v iding as much detailed informat ion as possible for such refusal.
Refusal to co- operate.
Added by: XX. 2007.71.
Amended by: X. 2011.32.
(a) a subsidiary of a person holding an investment services licence or an equivalent authorisation or of a credit institution
authorised in another Member State or EEA State; or
(b) a subsidiary of the parent undertaking of a person holding an investment services licence or an equivalent
authorisation or of a credit institution authorised in another Member State or EEA State; or
(c) controlled by the same natural or legal persons which control a holder of an investment services licence or the holder of an
equivalent authorisation or a credit institution authorised in another Member State or EEA State,
the competent authority shall consult with the relevant European
Inter-authority consultation prior to granting of a licence.
Added by: XX. 2007.71.
regulatory authorities.
(2) Prior to granting a licence to an applicant which is -
(a) a subsidiary of a credit institution or insurance undertaking authorised in another Member State or EEA State;
or
(b) a subsidiary of the parent undertaking of a credit institution or insurance undertaking authorised in another
Member State or EEA State; or
(c) controlled by the same person, whether natural or legal, who controls a credit institution or insurance undertaking
authorised in another Member State or EEA State,
the competent authority shall consult with the European regulatory authority responsible for the supervision of credit institutions
or insurance undertakings.
(3) Consultation between the competent authority and the European regulatory authorities shall in particular take place when
assessing the suitability of the shareholders or members and the reputation and experience of persons who effectively direct the
business involved in the management of another entity of the same group. The competent authority shall exchange all information that
is of relevance to the ot her Eu ropean reg u latory aut horit ies involved regarding the suitability of shareholders or members
and the reputation and experience of persons who effectively direct the bu sin e ss, b o t h fo r t h e gr an ti ng of a licence
as well a s for the ongoing assessment of compliance with operating conditions.
Added by: XX. 2007.72.
Co-operation with overseas regulatory authorities.
Added by: XX. 2007.72.
CO-OPERATION WITH OVERSEAS REGULATORY AUTHORITIES AND OTHER BODIES
Provided that the transfer of personal data to countries that are not Member States or EEA States shall be in accordance with the
provisions of Chapter IV of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of
personal data and on the free movement of such data.
(2) The competent authority may conclude cooperation agreem ents provid i ng for the ex change of information with
overseas regulatory authorities, other authorities or with bodies and natural or legal persons in countries that are not Member States
or EEA States responsible for:
(i) the supervision of credit institutions, other financial organisations, persons holding a licence,
insurance undertakings and the supervision of financial markets;
(ii) the liquidation and bankruptcy of persons holding a licence or an equivalent authorisation and other similar procedures;
(iii) carrying out statutory audits of the accounts of persons holding a licence or an equivalent authorisation and
other financial institutions, credit institutions and insurance undertakings, in the performance of their supervisory functions,
or which administer compensation schemes, in the performance of their functions;
(iv) overseeing the bodies involved in the liquidation and bankruptcy of persons holding a licence or an equivalent authorisation
and other similar procedures;
(v) overseeing persons charged with carrying out statutory audits of the accounts of insurance undertakings, persons
holding a licence or an equivalent authorisation, credit institutions and other financial institutions.
(3) Where the information in the possession of the competent authority had originated from a European regulatory authority or an
o v erseas regulato r y aut hori t y, it may n o t b e disclosed to an overseas regulatory authority or to any other third party
without the express agreement of the Europe an regulatory authority or the overseas regulatory authority which had transmitted it
and, where appropriate, solely for the purposes for which that authority had given its agreement.
(4) Without prejudice to the foregoing provisions of this article, at t h e requ est of, or for the purp o ses o f assi
st ing an overseas regulatory authority, the competent authority may exercise the powers listed in article 17(11), and for the purposes
of this sub- article the words "European regulatory authority" shall be read as "overseas regulatory authority".
DUTY OF AUDITORS
(a) is likely to lead to a serious qualification or refusal of the auditor ’s report on the accounts of such licence holder; or
(b) constitutes or is likely to constitute a material breach of the legal or regulatory requirements applicable to the licence holders
in or under this Act; or
(c) gravely impairs the licence holder ’s ability to continue
Auditor’s duty to report.
Amended by:
XVII. 2002.150.
as a going concern; or
(d) relates to any other matter which may be prescribed. (2) An auditor of the licence holder shall report to the
competent authority any facts or decision as specified in subarticle
(1) of any person having close links with such licence holder within the meaning in article 6, of which he becomes aware in his capacity
as auditor of the licence holder or of the person having such close links.
(3) No duty (including the duty of professional secrecy) to which an auditor of the holder of a licence may be subject,
shall be regarded as contravened by reason of his communicating in good faith to the competent authority, whether or not in response
to a request from it, any information or opinion on a matter of which the auditor has become aware in his capacity as auditor of
that licence ho lder an d which is relevant to any funct ions of the com petent aut hority under the prov isi ons of thi s Act or
is req u ired to b e communicated by virtue of subarticle (1).
(4) The matters prescribed for the purposes of subarticle (1)(d) may in cl ud e mat t ers relat e d t o perso n s ot her th an t h e li cen c e holder.
Appeals. Amended by: XVII. 2002.151; XII. 2006.63; XX. 2007.73; XVII. 2009.9;
X. 2011.33.
Cap. 330.
APPEALS, REMEDIES, SANCTIONS AND CONFIDENTIALITY
19. (1) In this article the Financial Services Tribunal means the Tribunal established under article 21 of the Malta Financ ial Services Authority Act.
(2) Subject to the provisions of this article, an appeal shall lie to the Tribunal with respect to:
(a) any notice in terms of article 3(3);
(b) any failure to inform an applicant within the terms of article 6(6);
(c) any administrative penalty imposed under article 16A; (d) any refusal, variation, cancellation or suspension of a
licence under article 8(3);
(e) any notice issued or any order made in terms of articles 10, 10A and 10C;
(f) any decision concerning an advertisement under article
11;
(g) any punishment or penalty imposed under article
12(5); or
(h) any directive given under article 15.
Cap. 330. (3) The provisions of article 21 of the Malta Financial Services Authority Act shall apply mutatis mutandis to appeals that may be brought before the Tribunal under this article.
(4) In pursuance of the UCITS Directive, the Tribunal referred to in this article shall also have the competence to hear appeals by Eu ropean m a nagem e nt com p ani
e s, exercising a fre e dom of establis hment or a freedom to pro v id e ser v ices in Malt a, f r om decisions of the competent
authority to take measures for breaches in curred by Euro pean m a n a gem e nt companies a n d the phrases "aggrieved person"
and "appella nt" in article 21 of the Malta Fi nancial Services A u th ori t y Act shall include European management companies.
Cap. 330.
(a) by a person in the course of providing an investment service in contravention of the provisions of article 3 of this Act; or
(b) by the holder of an investment services licence or by an exempted person in consequence of anything said or done by a person
in the course of providing an investment service in contravention of the provisions of article 3,
shall be unenforceable against the other party; and such other party shall be entitled to recover any money paid, or other
property transferred by him under the agreement, or where such property cannot be so recovered, such party shall be entitled
to have it replaced by its value at the time of the agreement, together with compensation for any loss sustained by him in consequence
of such payment or transfer or the non-recovery of the property transferred and any profits that may have accrued as a result of
that money or other property having been transferred by him:
Provided that where on demand for a recovery under this article, the court is satisfied that -
(i) in a case falling under paragraph (a), the person therein mentioned reasonably believed he was not contravening the provisions of the said article 3; or
(ii) in a case falling under paragraph (b), the licence holder or exempted person neither knew nor ought to have known that the agreement was entered into as
mentioned in that paragraph,
it may allow an investment agreement to which this article applies to be enforced and the money or property paid or transferred
thereunder to be retained.
(a) that there is reasonable likelihood that a person will contravene any of the provisions of articles 3, 4 or 11 or of any Investment Services Rules and regulations made under it, or will contravene or fail to comply with any condition, obligation, requirement, Investment Services Rules, directive, or order made or given under any of the provisions of this Act; or
Unenforceability of certain agreements.
Powers of the court in the case of a likely contravention. Amended by: XXIV.1995.362; XX. 2007.74.
has contravened or failed to comply with any such condition, obligation, requirement, Investment Services Rules,
directive, or order and that steps could be taken to remedy the contravention or failure,
the court may give such orders as it may deem appropriate to restrain the contravention or, as the case may be, to require
the person referred to in paragraph (a) or (b), or any other person who appears to the court to have been knowingly concerned in the contravention, to take such steps
as the court may direct.
(2) If, on an application made under subarticle (1), the court is sat i sfi e d that a p e r s on has en tered in to any tr an
sact io n in contravention of any of the provisions of articles 3, 4 or 11, the court may order that person and any other person
who appears to the court to have been knowingly concerned in the contravention to take such steps as the court may direct for restoring
the parties to the position in which they were before the transaction was entered
into.
(3) If, on an application made under subarticle (1), the court is further satisfied that -
(a) profits have accrued to any person as a result of the contravention; or
(b) an investor has suffered loss or been otherwise adversely affected as a result of that contravention,
the court may order the person responsible for the contravention to pay into court such sum as appears to it to be just having regard
to the extent of the profit, loss or adverse effect as aforesaid, and order such sum to be paid out as the court may direct to the
persons who have entered into transactions as a result of which profits have accrued or losses or adverse effects have
been suffered as aforesaid.
(4) For the purposes of this article the court may order the production by any person of such accounts and the provision
of such information, and verified in such manner, as the court may deem appropriate.
(5) The provisions of this article shall be without prejudice to any right of any aggrieved person to bring proceedings directly
in respect of any right such person may otherwise have independently of the competent authority.
Offences. Amended by: XX. 2007.75.
(2) Any person who for the purposes of, or pursuant to, any of the provisions of this Act or of any regulations made thereunder, or
any condition, obligation, requirement, directive or order made or given as aforesaid, furnishes information or makes a statement
w h ich he knows t o be inaccurat e , false or m i slead i ng i n an y material respect, or recklessly furnishes information or makes
a statement which is inaccurate, false or misleading in any material respect, shall be guilty of an offence.
(3) Any person who is knowingly a party to the carrying on of any investment service or of any activity by a collective investment
scheme with a fraudulent intent or for a fraudulent purpose, shall be guilty of an offence.
(4) Any person who by any statement, promise or forecast which he knows to be misleading, false or deceptive, or by any
dishonest concealment of material facts, or by the reckless making (whether disho n est or otherwi se) of any statem en t, prom ise
or f o recast wh ich is mi sleadin g, fa lse or dece ptive, induc e s or attempts to induce another person to enter into or offer
to enter into an investment agreement, shall be guilty of an offence.
(5) Any person who with intent to avoid detection of the com mission of an of fence under this Act removes, destroy s
, conceals or fraudulently alters any book, document or other paper, shall be guilty of an offence.
(6) Any person who intentionally obstructs a person exercising rights conferred by this Act shall be guilty of an offence.
23. A person guilty of an offence under the provisions of art i cle 22 shall be liable on conviction to a f i n e (mu lta ) not exceeding four hundred and sixty-six thousand euro (€466,000) or to a term of imprisonment not exceeding four years, or to
both such fine and impr iso nment, unless such fin e o r term of im prisonm ent is otherwise imposed under article 12(5).
(2) The provisions of this Act shall not affect any criminal proceedings that may be competent under any other law.
Penalties. Amended by: XX. 2007.76;
L.N. 425 of 2007; X. 2011.34.
Criminal proceedings.
(2) Nothing in this article shall restrict or otherwise prejudice the powers of the competent authority under article 15(4).
Public statement as to person's misconduct. Amended by:
XII. 2006.64; XX. 2007.77.
Amended by: XVII. 2002.152. Substituted by: IV. 2003.176; XII. 2006.65. Amended by: XX. 2007.78;
X. 2011.35.
Cap. 345.
its officers, employees or agents, as well as by inspectors, auditors and experts engaged by the competent authority for the purposes
of, or pursuant to, any of th e prov isi ons of this Act, or of any Investment Services Rules or regulations made thereunder, or
in the discharge of any functions under any of the said provisions, shall be treated as confidential and protected by the duty of
professional secrecy, and shall not be disclosed to any other person, except in the following cases:
(a) where the disclosure is required for the detection, prevention or prosecution of criminal offences under the criminal
provisions of this Act or any other Act;
(b) where the information is disclosed with a view to the institution of, or otherwise for the purposes of any proceedings
by the competent authority before any court under this Act;
(c) where the information is disclosed in civil or commercial proceedings in relation to the bankruptcy or dissolution
and consequential winding up by the Court of a licence holder, provided such information does not concern third parties and
is necessary for the carrying out of the proceedings, or is disclosed to an overseas body responsible for the liquidation
and bankruptcy of a person holding a licence or an equivalent authorisation from a European regulatory authority or
an overseas regulatory authority;
(d) where a summary or collection of the information is prepared or supplied in such a way as not to enable the identity of any
persons, including UCITS, their management companies and custodians to whom the information relates to be ascertained;
(e) where the information is disclosed to an auditor where such disclosure would assist him in the exercise of his functions under
article 18;
(f) where the information is provided to the Central Bank of Malta or to the Listing Authority under the Financial Markets Act in the exercise of their respective functions in terms of law; and
(g) where the information is provided to such other local or overseas regulatory, judicial or enforcement authorities in
the pursuance of serious concerns of a regulatory or criminal nature:
Provided that this article shall not prevent the competent authority from exchanging or transmitting confidential information in accordance
with the MIFID Directive, the UCITS Directive, and with other Directives of the European Community applicable to licence holders, credit institutions, pension funds, insurance
and reinsurance intermediaries, insurance undertakings, regul ated markets or market operators:
Provided further that this article shall not prevent the
com p etent authority from using such info rmation for oth e r purposes where the body or person communicating information to the
competent authority consents thereto.
(2) Without prejudice to the cases covered by criminal law, any confidential information received by bodies or natural or legal
persons within the meaning of Article 58 of the MIFID Directive and of Article 102 of the UCITS Directive shall only be used in the performance of their duties and for the exercise of their functions. In addition, such inform ation is to
be used specifically for the purpose for which such information was provided to them and, or in the context of administrative or
judicial proceedings specifically related to the exercise of those functions:
Provided that where a body or person communicating i n format ion to the comp etent autho r ity consent s t h ereto, such
in fo rm at io n may b e u s ed by t h e competent auth o r it y fo r ot her purposes.
(3) The provisions of this article and of articles 17 and 17D of this Act shall not p r eclude the co mpetent au thori t y f r
om transmitting to the Central Bank of Malta, the European System of Central Banks and the European Central Bank, in their capacity
as monetary authorities, and, where appropriate, to recognised clearing houses or oth er sim ilar body pe rformi ng clearing or sett
lemen t services, to bodies which administer compensation schemes, and to other public authorities respo nsibl e fo r o verseein
g pay men t and sett lem e nt sy stem s, co nfide n ti al in fo rm at io n i n t e nd ed fo r th e performance of their functions:
Provided that where the exchange of information is carried out in terms of the UCITS Directive, the express consent of the European regulatory authority shall be obtained.
(4) Where an officer or an employee of a licence holder has reason to believe that a transaction or a proposed transaction could
involve mo ney lau nderin g or the fund ing of terro rism, h e shall act in compliance with the reporting and other obligations set
out in the regu latio ns mad e under arti cle 12 o f t he Preventi on of Mo ney Laundering Act and any procedures and guidance issued thereunder, and such disclosure shall not constitute a breach of confidentiality.
MISCELLANEOUS
Cap. 373.
Exclusion of liability. Amended by: XXV.1995.432; XX. 2007.79.
Notices, etc. Amended by: XX. 2007.80.
person if -
(a) it has been delivered to him; or
(b) it has been left at the address furnished by him to the competent authority, or to his last known address; or
(c) if it has been sent to him by post or by telefax at any of the aforesaid addresses; or
(d) in the case of a body of persons, whether corporate or unincorporate, or of a scheme or of a trust, if it has been given or served
in any of the manners aforesaid to or on a secretary, clerk, manager, trustee or their equivalent, or to any member of the governing
body or an appointed representative.
Application of Exchange Control Act.
Social security and import duty exemptions in respect of licence holders and expatriate staff. Cap. 318.
29. (Deleted by: XX. 2007.81.).
30. (1) Expatriate officers and employees of any licence holder and the licence holder shall be exempt from the provisions of
t h e Social Se curity Act , i n respect of remuneratio n p a i d or attributed to such officers and employees by the licence holder for services rendered exclusive
l y in a managerial capacity or in a function requiring special exp e rtise which is not generally available in Malta.
(2) In order to obtain the exemption provided for by subarticle (1), the licence holder shall apply to the Department for Social
Security identifying the officers and employees concerned together with such proof as the department may require that the conditions
of that sub-article are satisfied.
(3) Personal belongings and effects of an expatriate officer or employee of a licence holder imported by him into Malta, not later
than six months from his first taking up residence, shall be exempt from customs duty:
Provided that duty shall become payable on anything imported free of duty and subsequently sold, assigned or otherwise transferred
to a person resident in Malta.
(4) Furniture, equipment and other material required by a licence holder and imported into Malta for its own use and purpose
shall be exempt from customs duty:
Provided that duty shall become payable on anything imported free of duty and subsequently sold, assigned or otherwise transferred
to a person resident in Malta.
(5) For the purposes of this article, "expatriate" means an individual who is not a national of Malta, who has
been posted to Malta from abroad or recruited directly from abroad in order to be employed by a licence hold e r, whose mission
in Malta is of a temporary nature and who has maintain ed the centre of his economic interests outside Malta.
(2) The continuance of a foreign body corporate shall not take place unless such continuance (o r si mil ar p r ocess, in clud
in g conv er si on ) is p e rm i tte d b y the app l i cabl e la ws o f the f o re ign jurisdiction and is in accordance with such
provisions thereof as may bring about such continuance (or similar process).
(3) Continuance may only take place if it is allowed by the statute or equivalent instrument of the foreign body corporate to so
continue, and if it is approved in accordance with the procedure, if any, established therein or in th e applic able la w of th
e foreign jurisdiction for this purpose.
(4) The continuance of a foreign body corporate as a local body corporate shall be ef fected by an in st ru m e n t of co nt in
u a nc e contai ning , in ad dit i on to the d e cl arati ons relatin g t o th e cont in uance, the equ i val e nt of a m e mo ran
dum a nd art i cle s or equivalent constitutive document as may be required by this Act or other applicable laws of Malta for the
registration of such body corporate in accordance with the type of local body corporate in which it is to be continued, and showing
on the face of it that the continuance has been approved as provided in this article.
(5) The delivery of the instrument of continuance to the Registrar of Companies shall, for all purposes of the laws of
Malta, b e equi val e nt to the delivery of a deed o f partnersh i p o r of a memorandum and articles of a company, as the case
may be, as if it were a local body corporate to be registered under this Act; and the Registrar shall treat it accordingly.
(6) Upon the delivery of the instrument of continuance and its registration under this Act the body corporate shall cease to be
a body corporate under the jurisdiction of its previous registration and shall continue its corporate existence under the laws of
Malta, and shall retain all its assets, rights and liabilities.
(7) Where continuance as aforesaid entitles or requires the body corporate to redeem the interest of dissenting persons
whose approval is required, such interest may be redeemed on such terms as may be agreed or as the courts in Malta may, on demand
of either party, establish.
(8) (a) A local body corporate carrying on business as a collective investment scheme authorised or otherwise falling within the
meaning of this Act, may, subject to
the specific approval a n d authorisation of the competent authority, be continued as a foreign body
Continuance of foeign body corporate. Substituted by: XVII. 2002.153.
corporate, and the foregoing provisions of this article shall apply mutatis mutandis.
(b) A local body corporate shall not cease to be a local body corporate subject to Maltese jurisdiction until the Registrar h a s
received noti c e in writ ing of th e continuance (or other process) made as aforesaid and unless and until, being satisfied that
the requirements of this article have been complied with, the Registrar has registered su ch cont inuance and has, in consequence
thereof and by v i r t ue of th is art i cl e, struck the name of the company off the register.
(9) The Minister may, acting on the advice of the competent authority, make regulation s for the better carrying out of the provisions
of this article.
Amended by: L.N. 46 of 1999; XVII. 2002.154; XIII. 2004.80. Substituted by: XX. 2007.82.
Cap. 403.
(Artcle 2)
1. Reception and Transmission of Orders in relation to one or more instruments
The reception from a person of an order to buy, sell or subscribe for instruments and the transmission of that order to a third party
for execution.
2. Execution of orders on behalf of other persons
Acting to conclude agreements to buy, sell or subscribe for one or more instruments on behalf of other persons.
3. Dealing on own account
Trading against proprietary capital resulting in conclusion of transactions in one or more instruments.
4. Management of Investments
Managing or agreeing to manage assets belonging to another person if those assets consist of or include one or more instruments or
the arrangements for their management are such that the person managing or agreeing to manage those assets has a discretion to invest
any of those assets in one or more instruments.
Management of Investments may also constitute the selection or agreem ent to select , on a d i screti onary basis, instruments by
reference to which benefits are wholly or partly payable under a contract of insurance falling within class III - linked long term
of the Second Schedule to the Insurance Business Act.
5. Trustee, Custodian or Nominee Services
(a) Acting as trustee, custodian or nominee holder of an instrument, or of the assets represented by or otherwise
connected with an instrument, where the
person acting as trustee, custodian or nominee holder is so doing as part of his providing any investment service in paragraphs
1, 2, 3, 4 or 6 of this Schedule;
Provided that for the purposes of this sub-paragraph any person who is authorised or otherwise exempt from authorisation in
the terms of article 43 or 43A of the Trusts and Trustees Act shall not by virtue of holding such assets be required to have a licence in terms of this subparagraph if such person does
not provide an investment service and delegates all activities which are investment services in terms of this Act
to a person who is licenced to provide such services; or
(b) Holding an instrument or the assets represented by or otherwise connected with an instrument as nominee, where the person acting
as nominee is so doing on behalf of another person who is providing any investment service in this Schedule or
on behalf of a client of such person, and such nominee holding is carried out in relation to such investment service:
Provided that for the purposes of this paragraph any person who is authorised or otherwise exempt from authorisation in the terms
of article 43 or 43A of the Trusts and Trustees Act shall not by virtue of holding such assets be required to have a licence in
terms of this Act.
(c) Acting as trustee or custodian in relation to a collective investment scheme.
6. Investment Advice
Giving, offering or agreeing to give, to persons in their capacity as investors or potential investors or as agent for an investor
or potential investor, a personal recommendation in respect of one or more transactions relating to one or more instruments.
For the purposes of this paragraph, a "personal recommendation" shall mean a recommendation presented as suitable for the
person to whom it is addressed, or which is based on a consideration of the ci rcumstances of that p e r s on , and m u st
constitute a recommendation to take one of the following steps:
(a) to buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular instrument;
(b) to exercise or not to exercise any right conferred by a particular instrument to buy, sell, subscribe for, exchange,
or redeem an instrument;
(c) to select one or more instruments by reference to which benefits are wholly or partly payable under a contract of insurance
falling within the meaning of class III - ‘linked long term’, of the Second Schedule to the Insurance Business Act.
A recomm endation is not a pe rsonal recomm endation if it is
Cap. 331.
Cap. 403.
issued exclusively through distribution channels or to the public.
7. Underwriting of instruments and, or placing of instruments on a firm commitment basis
The underwriting or placing of instruments such that the person providing the service assumes the risk of bringing a new securities
issue to the market by buying th e issue from the issuer thereby guaranteeing the sale of a certain number of shares to investors
8. Placing of Instruments without a firm commitment basis
The marketing of newly-issued securities or of securities which are already in issue but not listed, to specified persons and which
does not involve an offer to the public or to existing holders of the issuer ’s securities’ - without assuming the risk of guaranteeing
the sale of a certain number of shares by buying the relative securities from the issuer.
9. Operation of a Multilateral Trading Facility
The oper ation of a m ultilater al syst em which br ings together multiple third party buying and selling interests in instruments
- in the system and in accordance with non-discretionary requirements - in a way that results in a contract.
Amended by:
L.N. 191 of 1998;
XVII. 2002.155;
L.N. 318 of 2006.
Substituted by:
XX. 2007.83.
(Article 2)
1. Transferable Securities.
Those classes of securities which are negotiable on the capital market and include:
(a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depository receipts
in respect of shares;
(b) bonds or other forms of securitised debt, including depository receipts in respect of such securities;
(c) any other securities giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement
determined by reference to transferable securities, currencies, interest rates or yields, commodities or other
indices or measures.
2. Money Market Instruments.
Those classes of instruments which are normally dealt in on the money market, such as treasury bills, certificates of deposit and
commercial papers and excluding instruments of payment.
3. Units in collective investment schemes.
4 Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies,
interest rates or yields, or other derivative instruments, financial indices or
financial measures which may be settled physically or in cash.
5. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodi ties that must be
settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination
event).
6. Options, futures, swaps, and any other derivative contracts relating to commodities, that can be physically settled provided
that they are traded on a regulated market, within the meaning of the Financial Markets Act and, or a Multilateral Trading Facility within the meaning of the First Schedule.
7. Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled,
are not for commercial purposes, are not included in article 6 of this Schedu le, and, which have the characteristics of other derivative
instruments, having regard to whether, inter alia, they are cleared and settled throughout recognized clearing houses or are subject to regular margin calls.
8. Derivative instruments for the transfer of credit risk.
9. Rights under a contract for differences or under any other contract the purpose or intended purpose of which is to secure
a profit or avoid a loss by reference to fluctuations in the value or price for property of any description or in an index or other
factor designated for that purpose in the contract.
10. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight
rates, em i s sion allow a nces or in flati on rat e s or oth e r offi cial economic statistics that must be settled in cash or may
be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event), as well
as any other derivative con t racts relat i ng to assets, rights, obligations, indices and measures not otherwise mentioned in this
Schedule, which have the characteristics of other derivative instruments, having regard to whether, inter alia, they are traded
on a regulated market within the meaning of the Financia l Markets Act or a Multilateral Trading Facility within the meaning of the First Schedule, are cleared and settled through recognized clearing houses
or are subject to regular margin calls.
11. Certificates or other instruments which confer property rights in respect of any instrument falling within this Schedule.
12. Foreign exchange acquired or held for investment purposes.
Cap. 345.
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